Gujarat – The Emerging Solar Energy Capital of India

Gujarat, located in western India and one of the most progressive states, has showcased a truly aggressive attitude towards harnessing optimum solar energy, as part of its Solar Policy 2009. A geographic area of 196,000 km2 receives average isolation of between 5.6 – 6 kWh/m2, which is higher than the figures for Spain. Gujarat was one of the first states to establish an agency dedicated to the development of renewable energy in 1979 Gujarat Energy Development Agency (GEDA).

By Jaideep Malaviya, Research Analyst

Toolbox

The State Feed-In Tariff
The State announced the Solar Policy 2009
which is targeting 500 MW by March 2014. This received a colossal response, with, according to a State Government official, applications received for capacities in excess of 5,000 MW. 716
MW were sanctioned, including solar thermal power projects. The share of PV projects is 365 MW. The completion date is December 2010. To date, with the exception of 5 MW by Lanco, the other projects are either at an advanced or a completed stage. The Policy is valid until March 2014. The rate of purchase of power for projects completed after December 2010 will be 15/kWh for the first 12 years, and 5/kWh thereafter for 13 years. The Tariff Order also addresses technical and commercial issues such as transmission, wheeling charges, security deposit, sharing of CDM benefits etc. The State Regulatory Commission is the first in the country to issue a comprehensive Tariff Order on solar energy - apart from the National Solar Mission Policy announced by the Federal Government.

The Gujarat Solar Policy Plan: 365 MW Approved
The Solar Policy 2009 was slightly modified, with additional features being added, to produce the Solar Policy 2010. The new completion date mentioned in GERC’s (Gujarat Electricity Regulatory Commission) acceptance letter is 31st December 2011. Gujarat Urja Vikas Nigam Ltd. (GUVNL) is in the process of signing PPAs with developers of Phase II for an additional 500 MW. The final list of these additional agreements is expected by the end of month. Today, capacity has already been reached, so there is little chance of new capacities being announced in 2011.

The 2010 Policy includes:
i) Additional features such as a 5-year no-change clause regarding the company’s shareholding status, ii) Equity sharing of up to 49% is permitted by the Technical Partner, and iii) An option to go for private land or go to the Government-approved Solar Park.
Once the project has been approved, the Purchase Agreement (PPA) with the State utility must be signed within 45 days.

State Energy policymakers realized very quickly that opening the door to allow applications to be filed from everybody could well wreak unnecessary havoc on the Government machinery. Most of these applicants are either power generation industry brokers or fly-by-night operators who want to try their luck in case they do not qualify under the National Solar Mission. Hence, a careful approach was implemented for the selection of the final list of developers, including personal intervention. In all, there are 24 developers approved for a capacity of 365 MW under the Solar Policy 2010, for PV projects ranging from 5 MW – 40 MW. This also includes developers from Europe.

First Large-Scale PV Project in the State
A 5 MW Solar Project developed by Lanco Infrastructure is one of the first successfully commissioned and synchronized PV projects in the State. It is one of the largest in the country. The company is now also in the process of preparing a detailed business plan for setting up a manufacturing facility for solar cells and modules in Gujarat. Others from the list of projects allocated for 365 MW PV will follow suit.

The 1,000 MW Project Initiative
To further facilitate land allotment and development of solar projects, Charanaka, a village nestled in a remote corner of the Patan district in north Gujarat, was selected to develop the Solar Park
in Gujarat. The cost of this initiative will be 80 billion (approx. €1.35 billion). It will be Asia’s first such large-scale solar PV park. Daily average solar insolation is 5.9 kWh/m2. There will be two 440KV substations for power evacuation, with large, wide roads for the container-loaded trucks, as well as water, primary electricity, and land for residential buildings and material storage facilities. It is destined to become the State’s solar power generation hub. It is expected that the basic facilities will be completed by January 2011.

Gujarat Power Corporation Limited (GPCL) will be the nodal agency overseeing the development. Gujarat Urja Vikas Nigam Ltd (GUVNL) is currently in the process of entering into a long-term PPA with 80 solar power project investors to commission almost 1,000 MW generation capacity. This capacity will help procure close to 1,700 million kWh of solar power.

Looking Ahead
Gujarat has implemented significant initiatives in the past to harness solar energy. By 2012, Gujarat is expected to have a demand for 14,000 MW of electricity. Solar power will have close to a respectable 1% share in the total generation, which will set an example for other states in the country. It is expected that the State Government may announce several additional capacities to those already allocated, as discussed above.
The Managing Director of GEDA will discuss solar market developments in Gujarat as one of the speakers at the international conference “The Solar Future: India”
to be held 24-25 January in New Delhi.